Versabank (VBNK) AI Stock Analysis

• Market Cap: $542.74M
• Dividend Yield: 0.6%
• Average Volume (3M): 29.91K
• Price to Earnings (P/E): 17.6
• Beta (1Y): 1.15
• Revenue Growth: 4.19%
• EPS Growth: -46.14%
• Country: CA
• Employees: 121
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.30
• Shares Outstanding: 32,518,787
• 10 Day Avg. Volume: 35,972
• 30 Day Avg. Volume: 29,914
• PEG Ratio: -2.68
• Price to Book (P/B): 1.36
• Price to Sales (P/S): 1.85
• P/FCF Ratio: 2.14
• Enterprise Value/Market Cap: 0.33
• Enterprise Value/Revenue: 0.59
• Enterprise Value/Gross Profit: 1.55
• Enterprise Value/Ebitda: 4.14
• 1Y Price Target: $16.95
• Price Target Upside: 1.53% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 73 Outperform
• Price Target: C$17.50 ▲(4.85% Upside)

Versabank's strong financial performance and positive earnings call highlights are tempered by technical indicators suggesting potential bearish sentiment and modest valuation metrics. The company's ability to manage liabilities and maintain consistent cash flow will be crucial for future performance.

Positive Factors

Digital Banking Model

VersaBank’s digital banking model delivers scalable lending in a risk-mitigated structure.

U.S. Market Entry

EPS growth and rising ROCE benefit from U.S. market entry and continued strength originating RPP loans in Canada.

Negative Factors

Loan Growth

Loan growth of 9.1% Y/Y was the lowest since F1Q21, on weak Canadian fundamentals.

US RPP Rollout

US RPP rollout is moving slower than planned, with discussions with partners slowed by the complexity of the new program.

Versabank Business Overview & Revenue Model

Company Description

VersaBank, a schedule I chartered bank, provides various banking products and services in Canada. The company offers deposit products, such as guaranteed investment certificates, registered retirement savings plans, daily interest savings accounts, and tax-free savings accounts, as well as deposit insurance products. It also provides lending services, including point of sale financing that involves purchasing loan and lease receivables from finance companies operating in various industries; and commercial banking services comprising commercial real estate, public sector/infrastructure financing, condominium financing, and residential mortgages. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

How the Company Makes Money

Versabank generates revenue primarily through interest income from its loan portfolio, which includes commercial loans and mortgages. The bank also earns interest from its investments in securities and other financial instruments. Additionally, Versabank offers deposit accounts that provide interest income while attracting customer funds. Key partnerships with technology providers enhance its digital banking capabilities, allowing for streamlined operations and improved customer service, which can lead to increased customer acquisition and retention, further boosting revenue.

Versabank Financial Statement Overview

Summary

Versabank demonstrates strong financial health with robust revenue growth and profitability. The balance sheet is solid with a favorable Debt-to-Equity Ratio and improved ROE. However, attention is needed on managing liabilities growth and ensuring consistent cash flow performance.

Income Statement

Versabank has demonstrated strong revenue growth and profitability, with a significant increase in Total Revenue from prior periods. The TTM (Trailing-Twelve-Months) Gross Profit Margin is robust, and Net Profit Margin has also improved, indicating efficient cost management. However, the volatility in EBIT and EBITDA margins suggests potential fluctuations in operational efficiency.

Balance Sheet

The balance sheet shows a healthy equity buffer with a favorable Debt-to-Equity Ratio, indicating prudent leverage management. The Equity Ratio is stable, reflecting a solid asset base relative to liabilities. Return on Equity (ROE) has improved, showcasing effective use of shareholder funds. However, the potential risk lies in the increasing total liabilities, which may impact future financial flexibility.

Cash Flow

Operating Cash Flow is strong, supporting a healthy Free Cash Flow position. The Free Cash Flow to Net Income Ratio indicates efficient cash conversion from earnings. The Free Cash Flow Growth Rate has been positive, though the Operating Cash Flow to Net Income Ratio shows some volatility, suggesting potential challenges in consistent cash generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	299.85M	294.40M	108.03M	82.39M	65.36M	54.19M
Gross Profit	113.90M	111.63M	108.64M	82.39M	65.36M	54.19M
EBITDA	42.71M	57.43M	59.43M	34.49M	32.52M	27.90M
Net Income	28.77M	39.75M	42.16M	22.66M	22.38M	19.41M
Balance Sheet
Total Assets	5.48B	4.84B	4.20B	3.27B	2.42B	1.94B
Cash, Cash Equivalents and Short-Term Investments	621.40M	226.21M	132.24M	88.58M	271.52M	257.64M
Total Debt	105.01M	105.54M	110.62M	109.42M	100.39M	16.72M
Total Liabilities	4.95B	4.44B	3.82B	2.92B	2.08B	1.69B
Stockholders Equity	528.14M	399.20M	377.16M	350.68M	332.11M	255.29M
Cash Flow
Free Cash Flow	147.79M	254.13M	94.36M	-33.23M	-108.32M	139.35M
Operating Cash Flow	148.36M	272.70M	104.55M	57.46M	-108.31M	139.59M
Investing Cash Flow	-17.71M	-157.58M	-28.14M	-141.61M	-8.44M	9.76M
Financing Cash Flow	91.08M	-23.33M	823.25M	-6.30M	131.40M	-30.85M

Versabank Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 16.69
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:VBNK, the sentiment is Positive. The current price of 16.69 is above the 20-day moving average (MA) of 14.96, above the 50-day MA of 15.43, and below the 200-day MA of 17.06, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 68.17 is Neutral, neither overbought nor oversold. The STOCH value of 92.81 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:VBNK.

Versabank Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VBNK	73 Outperform	$542.74M	17.60	6.07%	0.60%	4.19%	-46.14%
Sector *	68 Neutral	$17.80B	11.87	10.23%	3.74%	9.69%	1.18%
LRCDF	―	$1.01B	10.41	5.47%	5.90%	―	―
MKP	73 Outperform	C$867.16M	11.86	11.84%	7.32%	12.10%	-18.24%
TF	70 Neutral	C$634.72M	14.60	6.30%	9.00%	-10.69%	-28.58%
AI	68 Neutral	C$551.52M	10.93	9.72%	7.97%	-11.04%	0.44%
FC	67 Neutral	C$445.25M	11.71	9.14%	8.43%	-0.92%	4.84%

Versabank Corporate Events

VersaBank Expands RPP with Securitized Financing Solution

VersaBank has expanded its Receivable Purchase Program (RPP) in the United States and Canada by launching a securitized financing solution, aiming to capitalize on the demand for lower-cost securitized financing. This strategic move is expected to generate additional asset and earnings growth, strengthen relationships with financing partners, and enhance the bank’s market position in both countries. To support this initiative, VersaBank has appointed Timothy Comiskey, a veteran in capital markets, to lead the expansion in the US.

The most recent analyst rating on (TSE:VBNK) stock is a Buy with a C$18.00 price target. To see the full list of analyst forecasts on Versabank stock, see the TSE:VBNK Stock Forecast page.